Income Protection Insurance

Income protection insurance is a type of insurance policy that can pay you a regular income if illness or injury prevents you from doing your job.

Rather than paying a single lump sum, an income protection policy will normally make monthly payments after an agreed waiting period. Depending on the type of policy selected, payments may continue until you return to work, the policy’s maximum claim period ends or you reach the policy expiry age.

Income protection insurance does not usually replace your full salary. Policies commonly cover a proportion of your earnings, with the maximum available depending on the insurer, your occupation and your personal circumstances.

When arranging income protection cover, you will agree several important policy features with the insurer. These can include:

• The amount of monthly benefit you would receive
• The illnesses and injuries covered by the policy
• The period before payments begin
• How long payments could continue
• The age at which the policy ends
• Whether the monthly benefit is fixed or increases over time
• How your occupation is assessed if you make a claim

If you become unable to work because of an eligible medical condition, you can submit a claim to the insurer. The insurer will review your medical evidence and circumstances before deciding whether the policy conditions have been met.

If the claim is accepted, payments will usually begin once the policy’s deferred period has ended.

The deferred period is the length of time you must be unable to work before your income protection payments begin.

Common deferred periods include four, eight, 13, 26 or 52 weeks, although the options available vary between insurers. A longer deferred period can sometimes reduce the cost of cover, but it also means waiting longer before receiving a payment.

When choosing a deferred period, it is important to consider:

• How long your employer would continue paying you
• Whether you receive contractual sick pay
• Your eligibility for any state benefits
• The amount you hold in savings
• How long you could meet your regular expenses without an income

Our advisers can help you choose a deferred period that complements your existing sick-pay arrangements and financial reserves.

The income protection market contains different policy definitions, benefit limits and underwriting requirements. Receiving advice can help you understand these differences and select cover suited to your circumstances.

A MortgageKey protection adviser can:

• Review your income and regular financial commitments
• Consider your employer’s sick-pay arrangements
• Explain the different incapacity definitions
• Help you select an appropriate deferred period
• Compare policies from a range of insurers
• Explain relevant exclusions and limitations
• Assist with completing your application accurately

Our aim is to help you put suitable financial protection in place at a cost you can afford.